What are facilities and administrative (F&A) rates?

Facilities and administrative (F&A) rates are the mechanisms used to reimburse the university for the infrastructure support costs, i.e. F&A costs, associated with sponsored research and other sponsored agreements. F&A rates are essentially overhead rates, calculated as a percentage of the direct costs of sponsored projects. These are actual costs to the university and directly support sponsored projects being performed by Georgia State University. Sometimes F&A rates are referred to as indirect cost rates.

FY16 F&A/Indirect Cost Rates (for awards beginning 7/1/2015)

FY17 F&A/Indirect Cost Rates (for awards beginning 7/1/2016)

Project Type

On- Campus

Off-Campus

Research

51.5%

26.0%

Instruction

53.0%

26.0%

Public Service

35%

26.0%

F&A/Indirect cost rates are based on Modified Total Direct Costs (MTDC), which is the total direct cost less equipment over $5,000, patient care costs, participant support costs, alterations/renovations, and rental of off-campus space and subcontract expenses in excess of $25,000 for each subcontract, student stipends and tuition.

Off-Campus Definition: For all activities performed in facilities not owned by the institution and to which rent is directly allocated to the project(s) the off campus rate applies. If more than 50% of a project is performed off-campus, the off-campus rate will apply to the entire project.

What are facilities and administrative (F&A) costs?

F&A costs are defined in OMB Circular A-21 as costs that are “incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.” F&A costs are sometimes referred to as indirect costs. Examples of F&A costs include:

Depreciation and interest costs associated with the University’s physical plant

Operating and maintenance costs such as utility costs, security costs, and custodial costs

Common administrative functions such as payroll and purchasing

Sponsored project administration such as that provided by College and department administrators and by OSPA

Because it is impractical to account separately for such costs, F&A costs are normally not charged as direct costs to sponsored projects.

How are F&A rates calculated?

F&A Rates are developed under the requirements of the U.S. Office of Management and Budget Circular A-21, Cost Principles for Educational Institutions. The rates are calculated according to the F&A Cost Rate Agreement for Georgia State University and negotiated with our cognizant federal audit agency, the Department of Health and Human Services (DHHS), Division of Cost Allocation (DCA), Mid-Atlantic region. The following rates are negotiated:

Organized Research (On-Campus)

Organized Research (Off-Campus)

Instruction (On-Campus)

Instruction (Off-Campus)

Other Sponsored Activity, i.e. Public Service (On-Campus)

Other Sponsored Activity, i.e. Public Service (Off-Campus)

All F&A costs within the institution are assigned to nine cost pools related to primary functions. Then a portion from each cost pool is attributed to the research enterprise according to guidelines provided in Circular A-21. Totaling the portions of each cost pool allocated to research yields the University’s total F&A costs (TFAC) attributable to sponsored research. The TFAC total is then converted into the F&A rate by dividing it by “Modified Total Direct Costs” (MTDC).

MTDC includes the total direct costs of a sponsored project less the cost of equipment over $5,000, capital expenditures, alterations/renovations, space rental costs, student stipends, tuition, scholarships and fellowships, participant support costs, and the portion of each subaward/subcontract in excess of $25,000 within a competing segment of an award.

Facilities and Administrative Costs

=

F&A Rates

MTDC Costs Base

Equation used to calculate F&A Rates

How are F&A Rates determined for individual grants and contracts?

The actual F&A rates for most Federally sponsored project awards are the standard rates referred to in the University’s F&A rate agreement. While it should be customary practice to use the University’s negotiated standard F&A rates on all sponsored projects, there are certain exceptions in which not all sponsors can reimburse the University for F&A costs at the negotiated rates. The following are some exceptions:

Many non-Federal sponsors such as state, local, and private agencies have policies concerning the reimbursement of F&A costs at less than the Federally-negotiated rates.

The F&A rate applied to individual awards is determined by:

Published sponsor policy or,

Statutory limitations or,

The Office of Sponsored Proposals and Awards (OSPA) during the final negotiation of an award, generally a contract, with a given sponsoring agency

Once an F&A rate is set with a sponsor for an individual award, it remains in effect throughout the entire competitive cycle of the award

How are F&A Rates applied to individual grants and contracts?

F&A costs are charged to individual awards as direct costs are incurred. The University does not recover F&A costs from sponsors until direct costs are charged to the award. F&A is typically applied to modified total direct costs (MTDC) of awards. This is referred to as the “F&A Base” and is the same base on which the University calculates and negotiates rates with DCA.

MTDC represents the total direct costs of a sponsored project less the cost of equipment over $5,000, capital expenditures, alterations/renovations, space rental costs, student stipends, tuition, scholarships and fellowships, participant support costs, and the portion of each subaward/subcontract in excess of $25,000 within a competing segment of an award.

Action

Amount

A researcher buys supplies on award

$100

The actual F&A rate on the award

50.5%

The university collects the F&A cost associated with that direct cost (supplies)

$50.50

The same researcher purchases a piece of equipment for $10,000

No F&A cost would be collected on that particular direct cost (equipment over $5,000)

F&A proposal process

Current F&A proposal schedule

The current F&A rates proposal is based upon FY 2014 (July 1, 2013 – June 30, 2014) costs and space data. Negotiation was completed Feb. 2015, and the new rates are in effect through FY 2017. New Rates are anticipated for FY 2018.

F&A proposal process overview

The university’s operating costs for a given base fiscal year are extracted from the central financial accounting system. All current fund expenditures with similar characteristics or purposes are aggregated into common cost categories called “cost pools” and classified as either facilities and administrative (F&A) or direct costs/functions. The pooled costs are then used to calculate rates that are incorporated into a proposal submitted to the Division of Cost Allocation (DCA). The proposal is the basis for negotiations that determine the actual F&A rates to be applied to grants and contracts.

F&A federal cognizant agency

The university negotiates F&A rates with its cognizant federal audit agency, the Department of Health and Human Services (DHHS), Division of Cost Allocation (DCA), Mid-Atlantic region.

Policies & regulations governing F&A rates

The policies and regulations governing the establishment of F&A rates at Georgia State University are set forth in Office of Management and Budget (OMB) Circular A-21, Cost Principles for Educational Institutions.

F&A space functional use

Space data is one of the most important factors in determining the F&A rate, because facility costs are primarily allocated to University functions, such as instruction and research, according to the functions assigned to University space. It is therefore critical that every department or other unit accurately classify its space according to established functional use definitions.

New F&A rates FAQ

URSA is pleased to announce the successful negotiation of a new 2 year F&A (“indirect cost”) Rate Agreement, dated 12/18/2014 with the Department of Health and Human Services, DHHS. The following are the new on campus rates, beginning Fiscal Year 2016 (July 1, 2015): Research 50.5%, Instruction 53% and Public Service 35%. Beginning Fiscal Year 2017 (July 1, 2016): Research 51.5%, Instruction 53% and Public Service 35%. To view the new F&A rate agreement click here. These new rates will improve the reimbursement the University receives for its F&A costs incurred during the performance of work on sponsored research and sponsored agreements. Even with the current rate changes, Georgia State will not be fully recovering the infrastructure support costs (i.e. F&A costs) associated with sponsored projects.

To remain eligible for federal research funding, the University is required periodically to enter into negotiations with a designated federal agency (in Georgia State’s case the Department of Health and Human Services, DHHS) to review the indirect costs associated with sponsored projects and determine the appropriate level of contribution by federal funding agencies to those indirect costs.

F&A (indirect) cost rate agreements streamline the process of awarding, monitoring, and closing out Federal grants and contracts. When a grant or contract officer issues an award to an organization, he/she is unaware of the indirect costs that will be associated with conducting the program. Indirect expenses such as executive administration, payroll, accounting, human resources, building and equipment depreciation, utilities, janitorial and maintenance are difficult to identify directly to grants and contracts. The F&A (indirect) cost rate allows the grant or contract officer to calculate the appropriate allocation of indirect costs associated with any one project by applying the negotiated F&A rate to the respective base used to develop the rate.

Principal Investigators (PIs) and their staff should begin using the new F&A rates in new, renewal and supplemental (competing continuation) proposals immediately for any awards in which performance will begin after June 30, 2015.

The new F&A rates must be used on all new, competitive renewal proposals and supplemental proposals that require budget negotiations from sponsors and are for projects with performance periods beginning after June 30, 2015 . Non-competing renewals and non-competing continuation proposals will continue to use the originally approved F&A rates throughout the remainder of their competitive segment. Additionally, proposals for sponsoring agencies that have statutory limitations or policies prohibiting the reimbursement of F&A costs at the Federally-negotiated rates should use the F&A rates set forth by the sponsor.

Yes, awards previously approved at the 48% rate will be honored for the budget period specified in the award.

Please note if you had an Instruction rate awarded at 48.6% on or after July 1, 2015 that rate will not be honored as per the F&A agreement letter 35% is the rate in effect for the period of 7/1/2015 to 6/30/2017, so your project’s F&A rate would be 35%.

For project budget years that begin prior to July 1, 2015, you should use the appropriate old F&A rate for the competitive segment. For the next competitive segment(s), you should use the appropriate new F&A rate(s). In other words, for project budget years that begin prior to 7/1/2015, you should use 48% for Research, 41.6% for Public Service, and 48.6% for Instruction for the entire first budget year. For the next budget year beginning between 7/1/2015 and 6/30/16, you should use 50.5% for Research, 35% for Public Service, and 53% for Instruction. For any budget years beginning on 7/1/2016 or later, you should use 51.5% for Research, 35% for Public Service, and 53% for Instruction.

For project budget years that begin on or after July 1, 2015 you should use the appropriate new F&A rate(s). In other words, for project budget years that begin between 7/1/2015 and 6/30/16, you should use 50.5% for Research, 35% for Public Service, and 53% for Instruction. For project budget years that begin on or after 7/1/2016, you should use 51.5% for Research, 35% for Public Service, and 53% for Instruction.

Rates currently in effect on active awards will be continued until the end of the current competitive segment of the award. A new competitive segment beginning on or after July 1, 2015 will be charged the new rate.

Federal contracts that are incrementally funded (committed on a yearly basis) will continue with the current rate until the end of the current budget period. A new budget period beginning on or after July 1, 2015 will be charged the new rate.

F&A rates for subcontracts under federal grants and contracts with start dates prior to July 1, 2015 will remain fixed for the life of the prime agreement (i.e., through the competitive segment of the prime award) at the F&A rate specified in the prime award.

New subcontracts with a start date of July 1, 2015 or later should use the appropriate new F&A rate.

However, if a new subcontract award with a start date of July 1, 2015 or later is received which has been issued at the old F&A rate, the PI or department administrator will need to coordinate with OSPA on procedures for requesting the new DHHS rates from the subcontracting agency. Should the subcontracting agency deny the request, exceptions may be granted on a case-by-case basis by OSPA to allow use of the expired rates.

Carry forward of funds will be impacted differently depending if sponsor approval is required or not. 1) When sponsor approval is required, one must look at the issuance date of the carry forward authorization and the start date of the most recent competitive segment of the original award to determine what F&A rate to use. 2) When sponsor approval is not required, one must review if funds are carried over within the same competitive segment or into a new competitive segment to determine what F&A rate to use. Please see New F&A Rates Subcontracts & Carry Forward Rates Implementation Guidance at http://www.gsu.edu/research/58352.html for further information and the details concerning carry forward of funds.

Sponsoring agencies have established application guidelines that specify the inclusion of F&A costs as well as proposal evaluation guidelines that state that panel reviewers are not allowed to include budget information (such as F&A rates) in their impact/priority score. Therefore F&A rates should have no impact on the competitiveness of a proposal.

Other Spons Activities is what Georgia State calls its Public Service F&A rate.

F&A rates implementation guidance

The following implementation guidance applies to all sponsored awards/proposals with the exception of:

Awards/proposals in which statutory limitations prevent some Federal sponsors from reimbursing F&A costs at the Federally- negotiated rates

Awards/proposals from sponsoring agencies (state, local, and private) that have policies concerning the reimbursement of F&A costs at less than the Federally- negotiated rates

Awards/proposals with an approved F&A Wavier

As sponsored awards/proposals such as the ones described above do not use the Federally-negotiated rates to begin with and therefore, the change in F&A rates does not impact those projects.

New, renewal and supplemental proposals

Principal Investigators (PIs) and their staff should begin using the new F&A rates in new, renewal and supplemental (competing continuation) proposals immediately. For competitive segments (i.e., the period of years, project years, approved by the funding agency at the time of the award, usually three to five years) the rates will be updated when the segment renews.

Important

To ease the transition for proposals that must be submitted to the sponsoring agency within 2 business days of Georgia State’s announcement of the new F&A rates, OSPA staff will temporarily continue to endorse proposals reflecting the old F&A rates; however, all proposals with agency deadline dates over 2 business days from the time of Georgia State’s announcement of the new F&A rates must use the new rates and update all budget documentation.

New, Renewal and Supplemental Proposals Submitted but not Yet Awarded

To ensure that direct costs available to PIs are not adversely impacted by this rate change, awards received prior to the new F&A rates announcement and new, renewal or supplemental proposals submitted to the sponsor prior to the new F&A rates announcement will, when necessary, be accepted using the F&A rate contained in the submitted proposal. OSPA will, however, work with agencies to increase F&A costs to the new rates wherever possible. Whichever F&A rate is finally awarded will subsequently be used throughout the competitive segment of that award.

Existing awards and their non-competitive proposals

All existing awards and their associated non-competitive continuation proposals will continue to use the F&A rate in effect at the time of their initial award (or most recent renewal) throughout the remainder of their competitive segment. This is necessary because governmental regulations require fixed rates over the life of a sponsored agreement and define “life” as each new competitive segment.

Example of F&A rates to use for new, renewal, and supplemental proposals vs. non-competitive proposals

To illustrate, new or competitive renewal on-campus research proposals submitted on or after the announcement of the new rates should use the new Research F&A rate(s), FY 16 50.5% and FY 17 51.5%. However, non-competitive on-campus research continuations will continue to use the old Research F&A rate of 48% included in their most recent new or renewal award until the end of their multi-year project period (i.e. competitive segment). If a renewal proposal is then submitted for that project, it should use the new rates. In most cases proposals for additional funding, for example supplemental proposals, on existing projects will also use the new rates.

F&A Rates subcontracts & carry forward implementation guidance

Subcontracts under federal grants and contracts

F&A rates for subcontracts under federal grants and contracts with start dates prior to July 1, 2015 will remain fixed for the life of the prime agreement (i.e., through the competitive segment of the prime award) at the rate specified in the prime award.

New subcontracts with a start date of July 1, 2015 or later should use the appropriate new F&A rate.

However, if a new subcontract award with a start date of July 1, 2015 or later is received which has been issued at the old F&A rate, the PI or department administrator will need to coordinate with OSPA on procedures for requesting the new DHHS rates from the subcontracting agency. Should the subcontracting agency deny the request, exceptions may be granted on a case-by-case basis by OSPA to allow use of the expired rates.

Sponsors consider carry forward of unobligated balances requiring their approval as new awards. Therefore the F&A rate to be used on these awards are based on the issuance date of the new award/authorization.

Use of old F&A rate

Carry forward awards with issue dates prior to July 1, 2015, the appropriate old F&A rate will be sustained through the completion of the current competitive segment of the award.

Use of old and new F&A rates

Carry forward awards with issue dates on or after July 1, 2015 but where the most recent competitive segment of the original award has a start date prior to July 1, 2015, a new speedtype/project number will need to be established to accomplish the proper charging of F&A costs for the carry forward balance.
F&A charges for the carry forward funds will be made at the appropriate new F&A rate whereas, F&A charges to the original awarded funds will be made at the appropriate old F&A rate through the completion of the current competitive segment of the awards.

Use of new F&A rate

Carry forward awards with issue dates on or after July 1, 2015 and where the most recent competitive segment of the original award has a start date on or after July 1, 2015, the appropriate new F&A rate will be used through the completion of the current competitive segment of the award.

Treatment of automatic carry forward of funds

The automatic carry forward of funds, which do not require sponsor approval, into the next budget period within the same competitive segment will continue to use the F&A rate in effect at the time of the initial award (or most recent renewal) throughout the remainder of their competitive segment.

However automatic carry forward of funds, which do not require sponsor approval, that cross over into a new competitive segment would function as a new award and use the appropriate new F&A rate through the completion of the current competitive segment.